Heritage Global Inc. Reports Fourth Quarter and Year-End 2024 Results

• Full year 2024 net operating income of $9.1 million
• Ended the year with $21.7 million in cash, reinforcing balance sheet strength and providing financial flexibility
• Repurchased approximately $2.2 million of common stock during full year 2024
• Entering 2025 with strong momentum and a robust pipeline

Heritage Global Inc. (NASDAQ:HGBL) ("Heritage Global," "HG" or "the Company"), an asset services company specializing in financial and industrial asset transactions, today reported financial results for the fourth quarter and year ended December 31, 2024.

Fourth Quarter and Year-End 2024 Summary of Financial Results (unaudited):

Fourth Quarter 2024 Review:

• The Company recorded operating income of $1.5 million for the fourth quarter of 2024, compared to operating income of $4.6 million in the fourth quarter of 2023.
• EBITDA totaled $1.6 million in the fourth quarter of 2024 versus EBITDA of $4.7 million in the fourth quarter of 2023, and Adjusted EBITDA was $2.1 million compared to $4.9 million in the prior-year quarter.
• Net loss, which includes a $1.3 million after tax allowance adjustment described below, was ($0.2) million or ($0.01) diluted loss per share for the fourth quarter of 2024, compared to net income of $4.9 million or $0.13 diluted earnings per share in the prior-year quarter.
• The Company has a significant amount of net operating loss carryforwards which begin to expire in 2025 if unused. As of December 31, 2024, the Company determined that it will likely utilize a lower portion of its net operating loss carryforwards than previously estimated, primarily due to decreased revenue related to the Company's extended loans placed in non-accrual status. As a result, the Company has increased its valuation allowance against its deferred tax assets by approximately $1.3 million as of December 31, 2024, which is reported as a $1.3 million increase in income tax expense for the fourth quarter.
• The Company strengthened its balance sheet by increasing stockholders' equity to $65.2 million as of December 31, 2024, compared to $61.1 million as of December 31, 2023, and increased net working capital to $18.5 million at December 31, 2024, compared to $11.6 million at December 31, 2023.
• On September 13, 2024, the Company's Board of Directors approved an amendment to the previously authorized repurchase program which increased the aggregate value of common shares the Company may repurchase to $6.0 million worth of common shares. The Company repurchased 1,266,408 shares in the open market during the year ended December 31, 2024, for a total of $2.2 million, or an average cost of $1.74 per share. As of December 31, 2024, the Company had approximately $3.0 million in remaining aggregate dollar value of shares that may be purchased under the repurchase program.

Heritage Global Chief Executive Officer Ross Dove commented, "We delivered solid results in 2024, strengthened our balance sheet, and returned capital to shareholders via our share repurchase program. While we had a tough comparison to a particularly strong 2023, Heritage delivered full year net operating income of more than $9 million and we enter 2025 with a strong and growing pipeline of opportunities. As expected, we saw improved sequential performance in our industrial assets division in the fourth quarter. While second half 2024 was light on disposition activity, we anticipate increased auction activity in 2025. We continue to compete for and win auction business from blue chip partners, reflecting our strong track record of success for the sale of industrial assets. At our financial assets division, we remain focused on selectively capitalizing on the continuing high levels of consumer spending that are driving increased charge offs. As we begin to move through 2025, we are optimistic about the strength of our pipeline and the market opportunities we are seeing across our businesses. We remain intent on expanding and leveraging our capabilities to drive growth and continued profitability.

"Subsequent to the quarter, we secured a $4.1 million mortgage for the purchase of a new corporate headquarters building which will provide us expanded office and warehouse space to support the Company's long-term growth while also giving us a real estate asset in what we believe is an attractive business district of San Diego," Mr. Dove concluded.

Brian Cobb, Chief Financial Officer, stated, "In the second quarter of 2024 Heritage Global Capital's largest borrower was placed into default and the loans extended to this borrower were placed into non-accrual status. Throughout the balance of 2024, this borrower continued to remit 100% of net collections generated from the underlying portfolio assets to both HGC and senior lenders. While net collections continue to be lower than the contractual monthly minimums, the borrower is actively working in tandem with its lenders to improve collection rates and we believe that these ongoing efforts will both improve the long-term cash flows to the lenders and strengthen the financial position of this borrower."

Fourth Quarter and Year-End Conference Call

Management will host a webcast and conference call on Thursday, March 13, 2025, at 5:00 p.m. ET to discuss financial results for fourth quarter and year-end 2024. Analysts and investors may participate via conference call, using the following dial-in information:

• 1-800-225-9448 (Domestic)
• 1-203-518-9708 (International)
• Conference ID: HGBLQ4

To access the webcast, individuals can use this link. The conference call will also be available in the Investor Relations section of the Company's website. To listen to a live broadcast, go to the site or click on the webcast link at least 10 minutes prior to the scheduled start time in order to register.

Replay

A replay of the call will be available approximately three hours after the call ends through March 27, 2025. To access the replay, dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The replay pin number is 11158220. A webcast replay can also be accessed on the Investor Relations section of the Company's website.

About Heritage Global Inc. ("HG")

Heritage Global Inc. (NASDAQ:HGBL) values and monetizes industrial & financial assets by providing acquisition, disposition, valuation, and lending services for surplus and distressed assets. This aids in facilitating the circular economy by diverting useful industrial assets from landfills and operating an ethical supply chain by overseeing post-sale account activity of financial assets. Specialties consist of acting as an adviser, in addition to acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, real estate, and charged-off account receivable portfolios through its two business units: Industrial Assets and Financial Assets.

Definitions and Disclosures Regarding non-GAAP Financial Information

The Company defines EBITDA as net income/loss plus depreciation and amortization, interest and other expense, and provision for income taxes. Adjusted EBITDA reflects EBITDA adjusted further to eliminate the effects of stock-based compensation. Management uses EBITDA and Adjusted EBITDA in assessing the Company's results, evaluating the Company's performance and in reaching operating and strategic decisions. Management believes that the presentation of EBITDA and Adjusted EBITDA, when considered together with our GAAP financial statements and the reconciliation to the most directly comparable GAAP financial measure, is useful in providing investors a more complete understanding of the factors and trends affecting the underlying performance of the Company on a historical and ongoing basis. The Company's use of EBITDA and Adjusted EBITDA is not meant to be, and should not be, considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the financial information, below, which reconciles our GAAP reported net income to EBITDA and Adjusted EBITDA for the periods presented (in thousands).

Forward-Looking Statements

This communication includes forward-looking statements based on our current expectations and projections about future events. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. While the Company believes the forward-looking statements contained in this communication are accurate, these forward-looking statements represent the Company's beliefs only as of the date of this communication, and there are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, including variability in magnitude and timing of asset liquidation transactions, the collectability of the charged off receivables that secure our loan portfolio, the impact of changes in the U.S. national and global economies, and interest rate and foreign exchange rate sensitivity, as well as other factors beyond the Company's control. Unless required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. For more details on factors that could affect these expectations, please see our filings with the Securities and Exchange Commission.

-financial tables follow-

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Investor Relations Contact:

John Nesbett/Jennifer Belodeau

IMS Investor Relations

203/972.9200

[email protected]